Lessons for GM from Google, Intel's Venture Capital Arms

General Motors aims to break into the venture capital business, having announced on Friday that it has created a new subsidiary called General Motors Ventures. Funded with an initial $100 million and tasked with identifying, developing and investing in innovative transportation technologies, GM’s new VC arm will have a learning curve to climb as it seeks equity stakes in companies with cutting edge tech and business models.

The venture arms of two major corporations in the IT sector — Intel, which has been investing in just about everything under the sun for nearly two decades, and Google, which launched a VC arm just a year ago — provide some cues for where GM should go from here.

Google’s venture capital arm, Google Ventures, has been operating for about a year and has named 10 companies in its portfolio. During an event last month down at Google headquarters, executives from the VC branch said Google Ventures plans to invest at least $100 million per year in startups across various industries. They also emphasized that the venture arm intends to make returns on its investments and doesn’t plan to invest just for the sake of acquiring the startups and bringing them into Google.

Planting Seeds for New GM Businesses

Part of the overarching goal for Intel’s venture capital arm is to “drive global Internet growth, facilitate new usage models, and advance computing and communications platforms,” or in other words, support tech that could eventually — and even indirectly — boost demand for Intel’s own products and services. That’s why you see Intel investing in the ecosystem of communications and the Internet, and not just in the latest chip technology.

As Liz has pointed out over on GigaOM, one of the best ways to garner a Google Ventures investment is to work with one of the two VC firms that have closely aligned themselves with Google: Kleiner Perkins and August Capital. But as the saga of V-Vehicle (a startup that basically bet it all on a federal loan that has not come through to build a high MPG car with a plastic shell) illustrates, following along with Kleiner Perkins’ greentech investments isn’t always the best move.

Woo the Innovator

If GM wants to lure in top innovators working on technology for next-gen cars, another cue from Google Ventures might be worth taking: Put entrepreneurs first. Liz reported in her piece, What Entrepreneurs Should Know About Raising Money from Google Ventures, that “Google and its M&A team would prefer to keep their prize deals out of the hands of competitors, but Google Ventures is mandated to help its entrepreneurs first.”

Given GM’s heavy backing from the federal government, it will face heightened scrutiny for any losing or particularly risky bets. As a company that has just repaid $6.7 billion in federal loans, and in which the government still owns a 61 percent stake (acquired through the conversion of $43.3 billion in loans), GM will have to walk a fine line taking calculated risks to align itself with auto innovators and gain access to cutting edge technology without igniting public ire.

For more research on electric vehicles check out GigaOM Pro (subscription required):Related research on GigaOM Pro (subscription required):